The Fat Lady has sung and Donald Trump will be the next US President. It is not often that we have days like today, if you factor in Brexit, we have had two of these days within months of each other – astonishing. Today’s report will come in a different format, we will not include daily ranges and the reason being is that on days like this, there are no ranges!! Anything can happen.
Dean's Daily FX Update – 09 November 2016
Below is a quick snapshot in what is a stunning night for the Republicans:
- Republicans retain the House
- Republicans retain the Senate
- Republicans have the most Governors since 1928
- Republicans have the most Representatives since the 1920’s
- Republicans have most Senators since WW2
- Donald Trump to win more blue collar votes than Ronald Reagan
This only starts to scratch the surface of how against all odds, this victory is so convincing! The big question is where to from here? It is a difficult task as we have seen the USD get sold off and the Equity Markets predictably obliterated, the markets hate anything that is not the Status Quo and this is what Trump represents.
Donald Trump’s victory speech will be key, he has a difficult task of uniting a divided country and the market will wait with baited breadth, to see if he will be as brash in his Presidency as he has been in this campaign. My gut says that his party will reign him in a little, we may get some over reaction in the coming days but drawing parallel with Brexit, once the dust settles it will be business as usual.
Below is a chart that illustrates the similarities between Donald Trump and Brexit, eerily similar. It is important to point out that the market was able to recover once the emotion was gone.
There has a been a trend around the world to gravitate towards high deficit spending, and I would not be surprised if that is what we see in the US – with global bonds at an all-time lows it definitely will be cheap but will add to the already growing debt. Once the US calms down, there will be strengthening growth in the US.
Timing becomes everything, but naturally this will create a lot of opportunity, perhaps in a couple weeks. The dust will settle and there will be an opportunity to buy Equity Markets and the USD. I will be keeping my eyes wide open for those when they present themselves.
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